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Monday, April 8, 2013

Margaret Thatcher’s unacknowledged grandchild

The death of Baroness Thatcher is dominating today's news. Despite the euologic praises heaped now posthumously on the ‘iron lady’ one cannot overlook one common
thread: ambiguity. Yes, she modernized Britain, but for whom? She was a war
leader, but what was really gained in the Falklands? She battled constantly
with her European friends, but to what avail? Yes, she was the first British
female head of state, fairly unprecedented in many countries at the time – but did
she leave a legacy to her sisterhood? “Well, yes, technically she was a woman...” was one of the funnier comments on Thatcher’s
gender role I once heard.

It is fair
to say then that among her legacy is certainly one topic which is close to the
interest of this blog. And we hasten to add, a legacy no less ambiguous than
all her other ones. She certainly symbolizes and has pioneered many of the
political changes which have given rise to Corporate Social Responsibility (CSR)
as a new business practice during the last three decades. This conclusion is
fairly obvious looking at some of the more historical work on the spread of CSR
in Europe by authors such as Jeremy Moon, Daniel Kinderman and others.

Among her
heritage we can certainly count the comprehensive privatization
of many then state-owned companies in the UK – a policy then also very popular
in the US during the administration of her close friend Ronald Reagan. It was
her conviction that telecommunication, public transport, water or electricity
can be better delivered by private companies and governed by ‘free’ markets’.
The attribute ‘free’, by the way, makes me cringe when it gets relentlessly
rehearsed today (just listing to BBC World while writing this). Whoever has
lived in the UK and has used, for instance, the railways knows that these
markets are anything but ‘free’. In many cases her privatization project made a
few people very rich and created a monopoly for private companies which
resulted in lower quality of services and higher costs to the citizen-turned-consumer.

A second
important heritage was deregulation.
Many of her reforms here, for instance, created the burgeoning financial
industry in the City of London; but it also cut down workers rights, the power
of trade unions and a host of welfare state institutions.

The crucial
side effect of this retreat of the state of course was that suddenly a huge
vacuum occurred. The initial reason why many public services were ‘public’ was
that receiving a letter, drinking clean water or having access to affordable
transportation was seen as a civic entitlement. And the expectations, once
administered by the state, now turned to private companies. The same with
abandoned public services: safe high streets, reliable schools,or care for the
elderly and poor in many cases morphed into ‘responsibilities’ for private
companies. The retailer Marks&Spencer, in explaining their CSR approach,
used the slogan ‘healthy high streets need healthy back streets’. It still symbolizes
this turn. Thatcher pioneered in the UK what we have seen over the years
happening in most other European countries and beyond with some time-lag; and
it is for this reason, that the UK became and still is the leader in CSR in
Europe.

The legacy
of privatization and deregulation again is at best ambiguous, and CSR as it
were is the knock-on effect of that. Even the more recent events at the
financial markets after 2008 can be seen as the aftermath of the Thatcherite
legacy. And lets not forget - the British banking system and indeed the UK economy
has been hit quite severely to this day. Deregulation left more discretion to
actors in those markets – which encouraged a behavior which has contributed to
the financial crisis. Which in turn led to calls for more responsible and
accountable corporate action even louder and more demanding today than ever
before (think Occupy).

CSR then
can be seen as some sort of unacknowledged grandchild of Mrs Thatcher: a
knock-on effect of her policies, but certainly not one she would have approved.
Her policies were very much inspired by the other big critic of CSR, Nobel
Laureate and Chicago economist Milton Friedman. It was a big illusion of the
1980s to think that government can discharge themselves from a host of public
services and responsibilities and to expect that the market will happily take
care of all those issues. While Thatcher’s idea was to free markets from
stifling regulation and to liberate companies to pursue their economic self
interest – companies end up having to look after healthcare, education,
infrastructure and many more social goods. It is fair to argue, that in the UK –
but also in Scandinavia, Germany and France – privatized utility companies are
at the forefront of CSR currently.

It is
deeply ironic that the person who emphatically claimed that ‘there is no such
thing as society’ instigated a renewed sense of social embeddedness and social responsibility
exactly in the very place which she went out to free from all such
considerations. While her famous statement ‘the lady is not for turning’
remains unforgotten, the turns of history are sometimes stronger than the most
resolute renegade – even if they come in the shape of an ‘iron lady’.

5 comments:

Easy to be a "Monday morning quarterback". Should analyze this in the context of the times she was living in. She made us aware of the power of private initiative and the overreliance on the actions of the State. It may have gone overboard, but a change in direction to move towards the middle was needed. History will recognize her contributions to role of the private sector in economic development. Not all countries were Scandinavia or Canada.

Antonio,thanks for your comments. It's easy, yes, but unless one is a real quaterback (and who of us?)it is the second best option. I would suggest another metaphor: sometimes you can only judge the tree by its fruits. And in Thatcher's case, they taste bittersweet. I also agree to you that context matters. In countries where stable institutions targeting the public good dont exist or dont function, CSR is a great 'Reparaturkonzept', a remedy concept. But Thatcher dismanteled the first and gave us the latter - which according to many criteria of liberal democracies is somewhat wanting. Anyhow, a long story. Thanks for caring to comment, and hopefully we have a chance soon to continue this conversation in person.Best, Dirk

Thanks for the thoughtful analysis Andy & Dirk. She has a mixed legacy for sure. Her stand against labour unions may have been a blow for worker rights, but strikes were crippling the economy and arguably she unwittingly dragged Britain into a lower carbon future. Then again, as you rightly point out, the bonanza of deregulation that she and Reagan championed led directly to our recent financial meltdown. Spawning the CSR industry, with the likes of Business in the Community springing up to fill the vacuum left by newly privatized companies, gave us 3 decades of voluntary self-regulation by business, during which time most of the social, environmental and ethical trends have worsened rather than improved. All this ambiguity was underscored this morning when I heard that "Ding Dong the Witch is Dead" has shot into the Top 40 charts, and someone commented "Rust in Peace, Iron Lady".

Thanks Wayne!I sometimes think that CSR etc. would have come anyhow at some stage, just due to globalisation and technologic progress. That Thatcher shaped some of the developments is a bit like the doctor who in order to cure the broken leg just amputates the whole thing...But as you say, looking at today's papers in the UK I am really taken aback by the vitriol and hatred she still instills in so many people. Amazing.Take care, Dirk

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Andrew Crane [L] and Dirk Matten [R]

Welcome to the Crane and Matten blog - for informed commentary and expert analysis on the everchanging world of corporate responsibility.

We are two business school professors best known for our books and research articles on business ethics and corporate citizenship. We wrote the Crane and Matten blog from 2008-2015, offering unique insight on a range of issues from across the globe.

Andrew Craneis Professor of Business and Society in the School of Management, University of Bath.

Dirk Matten is the Hewlett Packard Chair in Corporate Social Responsibility in the Schulich School of Business, York University.